Paycom’s strong earnings send stock soaring
Investors decided Thursday to cash in on strong quarterly and annual results and a cheerful 2017 forecast posted by Oklahoma City-based Paycom Software, Inc.
The stock opened Thursday at $45.26 a share and reached a high of $51.62 before closing at the end of the session at $51.32, up more than $6, or 13 percent, for the day. Paycom was the seventh-largest gainer on the New York Stock Exchange on Thursday.
Wednesday, the company announced it earned a fourthquarter 2016 net income of $8.6 million, or 15 cents a share. For the same period in 2015, its net income was $5.2 million, or 9 cents a share.
Paycom reported total revenue of $87.8 million in the fourth quarter, compared to $65.1 million during the same period in 2015.
As for annual results, the company said its total revenue in 2016 was $329.1 million, compared to $224.7 million in 2015. Profits in 2016 more than doubled, growing to $43.8 million from $20.9 million the previous year.
For 2017, the company forecasts total revenues of between $422 million and $424 million.
An analyst watching the trend on Thursday said he suspected investors impatient for a quick payday played a big part in boosting the company’s stock value on Thursday.
“I think Paycom is benefiting from a bipolar Wall Street earnings season,” said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa.
Dollarhide said companies giving disappointing results for the
final quarter of 2016 so far have been getting slaughtered.
“Investors are selling them blindly,” he said.
But companies such as Paycom that are delivering strong earnings reports and solid future guidance are attractive targets for investors who are seeking good returns, Dollarhide continued.
“A 13-percent gain in the value of a stock? That’s something an investor might expect to happen over a year’s time,” Dollarhide said. “When it happens in just one day, that’s certainly an attractive reward.”
Chad Richison, Paycom’s president and CEO, told analysts in a conference call on Wednesday that the company continues to grow in various ways. Richison noted Paycom recently opened a third building on its campus in far-northwest Oklahoma City, and has increased its number of employees to 2,075. The firm paid particular attention to growing its research and development team, and Richison said it had realized a benefit from that as it continues to work to make its software more streamlined and efficient.
“Because our goal is to potentially replace several different vendors when we win a new client, we have to ensure that our offerings provide greater value … than those of our competitors,” Richison said.
Those efforts recently earned Paycom new customers, Richison reported, including a 3,200-employee trucking company looking to replace its in-house human relations operations and five outsourced providers with one system that would serve its employees from the time they are hired until the time they retire.
Other customers Paycom took on for similar reasons included a 3,500-employee retail services company and an 8,000-employee health services company, he said.
At the start of his call with analysts, Richison thanked Paycom’s team for its hard work in achieving 2016’s results, noting that the firm was named a top workplace in Oklahoma by The Oklahoman for a fourth consecutive year and that it had been named to Deloitte’s Fast Technology 500 list for a second year.
“With so much robust growth, it becomes all the more important to sustain the culture that makes Paycom a great place to work and thrive,” he said.